Snap’s Growth Slows Further Amid Tech Downturn
Snap, the maker of the messaging app Snapchat, on Tuesday posted its slowest-ever rate of quarterly growth and swung to a net loss, in another sign of the tech industry’s slowdown.
Revenue was $1.3 billion for the fourth quarter, up 0.1 percent from a year earlier. The company’s net loss totaled $288 million, as spending increased nearly 20 percent from a year earlier. Snap had reported its first and only quarterly profit as a public company a year ago.
Snap’s daily active users increased 17 percent to 375 million, slightly less than the 378 million that Wall Street analysts had predicted.
“We continue to face significant headwinds as we look to accelerate revenue growth,” Evan Spiegel, Snap’s chief executive, said in a statement.
The results cap a difficult year for Snap. Persistent inflation and high interest rates have made advertisers — the company’s main source of revenue — reluctant to spend, while privacy changes by Apple have made it more difficult for social media companies to track and target users in their mobile advertising.
TikTok has also stolen advertising business from Snap and other platforms. The Chinese-owned video app, which Snap has called one of its “very large and very sophisticated competitors,” has attracted brands with its reach and cultural cachet, particularly among young people. In August, Snap laid off 20 percent of its employees, discontinued at least six products and lost several executives.
Digital advertising has slumped along with the global economy. But Snap has struggled more than its rivals because advertisers tend to begin budget cuts with smaller companies, instead of juggernauts like Facebook and Instagram, said Kelsey Chickering, a principal analyst at Forrester.
“Marketers are nervous about their economic outlook,” she said. “They’re moving their budgets into places that are proven to be effective.”
Snap again declined to forecast its future performance because of what it said were “uncertainties related to the operating environment.” But in a letter to investors, the company said revenue in the current quarter had declined 7 percent from a year earlier. It added that its internal forecasts for the current quarter assumed that revenue would decline between 2 percent and 10 percent, which would be Snap’s first revenue decline as a public company.